U.S. Bank N.A. v. Sukljian

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CV-25-1318

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U.S. Bank N.A. v Sukljian

2026 NY Slip Op 06191 October 22, 2026 Appellate Division, Third Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This decision is uncorrected and subject to revision before publication in the Official Reports. U.S. Bank National Association, as Trustee, Respondent,

Moses Sukljian, Appellant, et al., Defendants.

Decided and Entered:October 22, 2026

CV-25-1318

Calendar Date: September 17, 2026

Before: Clark, J.P., Ceresia, Mcshan And Powers, JJ.

Sandra Poland Demars, Albany, for appellant.

Hinshaw & Culbertson LLP, New York City (Claire A. Standish of counsel), for respondent. [*1]

Clark, J.P.

Appeal from an order of the Supreme Court (Christina Ryba, J.), entered July 24, 2025 in Albany County, which granted plaintiff's motion for, among other things, summary judgment.

In December 2005, defendant Moses Sukljian (hereinafter defendant) executed a promissory note in favor of WMC Mortgage Corp., which was secured by a mortgage on real property in Albany County. In 2018, after the note had been transferred to Ocwen Loan Servicing, LLC,^FN1 defendant entered into a loan modification agreement with Ocwen that increased the principal balance of the mortgage loan and set forth a new monthly payment amount. On July 17, 2023, plaintiff commenced this mortgage foreclosure action, alleging that it was the holder of the subject note and mortgage and that defendant was in default under the terms of the loan.^FN2 Defendant answered and asserted affirmative defenses, including that plaintiff lacked standing to commence the action. Thereafter, plaintiff filed a motion seeking, among other things, summary judgment in its favor, an order dismissing defendant's affirmative defenses, and the appointment of a referee to ascertain and compute the amount due and owing to it. Defendant opposed the motion, arguing, as relevant here, that plaintiff did not sustain its prima facie burden to demonstrate that it was the holder of the note at the time the action was commenced for the purposes of establishing standing, and that there were triable issues of fact precluding judgment as a matter of law in plaintiff's favor.

By order entered July 24, 2025, Supreme Court, as relevant here, granted plaintiff's motion for summary judgment, struck defendant's answer, and referred the matter to a referee to ascertain and compute the amount due and owing to plaintiff. In a corresponding written decision, Supreme Court found that plaintiff established its standing to commence the action by demonstrating that it was the holder of the subject note at the time it commenced the action. Additionally, the court held that plaintiff established its entitlement to judgment as a matter of law by submitting "testimonial and documentary evidence showing a valid note and mortgage and defendant's default thereon," and that defendant failed to raise a triable issue of fact in opposition sufficient to defeat such showing. Defendant appeals. In support of its motion for summary judgment, plaintiff submitted a copy of the underlying note, mortgage and loan modification agreement, along with proof of defendant's default, including a copy of defendant's mortgage payment history and a notice that had been sent to defendant reflecting his failure to make required monthly payments. Although such evidence would ordinarily be sufficient to establish plaintiff's entitlement to judgment as a matter of law, because defendant raised the affirmative defense of lack of standing in its answer, plaintiff was also required to prove that it had standing to commence the action in order to be entitled to relief (see [*2]Bayview Loan Servicing, LLC v Freyer, 192 AD3d 1421, 1422 [3d Dept 2021]; McCormack v Maloney, 160 AD3d 1098, 1099 [3d Dept 2018], lv dismissed 32 NY3d 1185 [2019]; Bank of N.Y. Mellon v Cronin, 151 AD3d 1504, 1506 [3d Dept 2017], lv dismissed 31 NY3d 1061 [2018]; Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d 737, 738 [3d Dept 2015]).

"A plaintiff demonstrates standing in a mortgage foreclosure action by establishing that it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced"

(Wilmington Sav. Fund Socy., FSB v LaFrate, 215 AD3d 1023, 1024 [3d Dept 2023] [internal quotation marks and citations omitted]; see U.S. Bank Trust, N.A. v Varian, 156 AD3d 1255, 1256 [3d Dept 2017]). However, "it is not necessary to have possession of the mortgage at the time the action is commenced," as "[a] transfer in full of the [note] obligation automatically transfers the mortgage as well[,] unless the parties agree that the transferor is to retain the

mortgage" (Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361 [2015]). "As such, it is the note, rather than the mortgage, that conveys standing to foreclose" (Bank of N.Y. Mellon v Cronin, 151 AD3d at 1506 [citations omitted]), and the plaintiff must establish either "[w]ritten assignment of the underlying note or physical delivery of the note sometime prior to the commencement of the [foreclosure] action" (U.S. Bank N.A. v Shaughnessy, 178 AD3d 1324, 1327 [3d Dept 2019]; see U.S. Bank Trust, N.A. v Varian, 156 AD3d at 1256). "Holder status is established where the plaintiff possesses a note that, on its face or by allonge, contains an [e]ndorsement in blank or bears a special [e]ndorsement payable to the order of the plaintiff" (Citibank, NA v Abrams, 144 AD3d 1212, 1214-1215 [3d Dept 2016] [internal quotation marks and citation omitted]; see U.S. Bank Trust, N.A. v Varian, 156 AD3d at 1256). Here, plaintiff asserted standing as the holder of the note at the time the action was commenced rather than as the assignee of the note. Although plaintiff attached a copy of the underlying note to the complaint and affirmed therein that it was in possession of the note prior to commencement of the action, the copy of the note attached to the complaint was not endorsed in blank, specially endorsed to plaintiff or accompanied by an allonge containing the required endorsements (see Residential Mtge. Loan Trust 2013-TT2 v Kaodichimma, 212 AD3d 742, 743 [2d Dept 2023]; McCormack v Maloney, 160 AD3d at 1100). "[W]here there is no allonge or note that is either endorsed in blank or specially endorsed to the plaintiff, mere physical possession of a note at the commencement of a foreclosure action is insufficient to confer standing or to make a plaintiff the lawful holder of a negotiable instrument for the purposes of enforcing the note" (Fifth Third Bank, N.A. v Stitt, 240 AD3d 576, 577 [2d Dept 2025] [internal quotation marks and citations omitted[*3]]; see McCormack v Maloney, 160 AD3d at 1100).

Plaintiff's evidence in support of its summary judgment motion also did not establish its standing to foreclose the mortgage. In that regard, plaintiff submitted with its motion papers, among other things, a copy of the underlying note and two undated allonges, one of which contained a special endorsement that made the note payable to the order of plaintiff.^FN3 However, mere possession of such allonges was insufficient to establish standing without evidence that they were "so firmly affixed" to the note "as to become a part thereof" at the time the action was commenced (UCC § 3- 202 [2]; see U.S. Bank N.A. v Chrismas-Beck, 219 AD3d 534, 537 [2d Dept 2023]; U.S. Bank N.A. v Moulton, 179 AD3d 734, 737 [2d Dept 2020]). Plaintiff did not submit any evidence indicating that either allonge was firmly affixed to the note at the time the action was commenced or that it even possessed the allonges at that time (see U.S. Bank N.A. v Chrismas-Beck, 219 AD3d at 537; U.S. Bank N.A. v Moulton, 179 AD3d at 737).

In addition to being undated, the allonges were not attached to or mentioned in the complaint (compare Flat Rock Mtge. Inv. Trust v Lott, 214 AD3d 1221, 1222 [3d Dept 2023]). Although plaintiff produced an affirmation from a senior loan analyst for PHH Mortgage Corporation â plaintiff's loan servicer/attorney-in-fact â confirming that PHH came into possession of the "original Note" prior to commencement of the action, the senior loan analyst provided no information about whether the note was accompanied by the allonges and, if so, whether the allonges were "firmly affixed" thereto (compare Aurora Loan Servs., LLC v Taylor, 25 NY3d at 360; U.S. Bank N.A. v Craft, 240 AD3d 1140, 1142 [3d Dept 2025]; LNV Corp. v Allison, 206 AD3d 710, 712 [2d Dept 2022]; Goldman Sachs Mtge. Co. v Mares, 166 AD3d 1126, 1129 [3d Dept 2018]; Citibank, NA v Abrams, 144 AD3d at 1215). The senior loan analyst provided no information about the date of the creation of the allonges or the time frame when plaintiff took possession of the note and allonges. On this record, plaintiff failed to establish as a matter of law that it had standing to commence the action, necessitating reversal of so much of Supreme Court's order as granted summary judgment in plaintiff's favor (see United Wholesale Mtge., LLC v Smith, 237 AD3d 1339, 1341-1342 [3d Dept 2025]; Citimortgage, Inc. v Ustick, 188 AD3d 793, 795 [2d Dept 2020]; U.S. Bank N.A. v Shaughnessy, 178 AD3d at 1326; Wells Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1377 [3d Dept 2015]).

Ceresia, McShan and Powers, JJ., concur.

ORDERED that the order is modified, on the law, without costs, by reversing so much thereof as granted that part of plaintiff's motion as sought summary judgment on the complaint, the appointment of a referee and to strike defendant's answer; motion denied to that extent; and, as so modified, affirmed.

Footnotes

Footnote 1 In 2019, Ocwen Loan Servicing, LLC merged into PHH Mortgage Corporation, which is the current loan servicer for the subject mortgage and attorney-in-fact to plaintiff.

Footnote 2

Plaintiff commenced this action as "U.S. Bank National Association, as Trustee, successor in interest to Bank of America, National Association, as Trustee, successor by merger to LaSalle Bank National Association, as Trustee for Residential Asset Mortgage Products, Inc., Mortgage Asset-Backed Pass-Through Certificates, Series 2007-RP2."

Footnote 3

The other allonge was from plaintiff to its wholly owned subsidiary, "U.S. Bank Trust Company, National Association, as Trustee, successor-in-interest to Bank of America[ ] National Association, as Trustee, successor by merger to LaSalle Bank National Association, as Trustee for Residential Asset Mortgage Products, Inc., Mortgage Asset-Backed Pass- Through Certificates, Series 2007-RP2." During the pendency of the action, plaintiff moved to amend the caption of the complaint to substitute the wholly owned subsidiary as the plaintiff. Supreme Court granted the motion in the order on appeal.

U.S. Bank N.A. v. Sukljian

U.S. Bank N.A. v. Sukljian

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